I believe that colored coins will be able to do everything Ripple can do. Maybe not every feature right away, but there is no technical reason any Ripple feature can't be implemented with colored coins.
I totally agree if by "colored coins" you mean more than what they currently are and the new features can make changes to the bitcoin protocol.
Colored coins will bring some price stability in that two people who trust the same issuer of USD colored bitcoins can conduct trade denominated in USD if they desire. That allows them the convenience and stability (for now) of USD and the anonymity and low transaction fees of bitcoin simultaneously.
Oh, I see.
Obviously colored coins are going to be a hotbed for fraud, although some institutions may have enough trust to issue USD, gold, oil, and other commodities and have people trust them. If people want to trade these currencies and commodities without trusting an issuer, that is when you need the MasterCoin protocol.
Ok, now I understand better what you want to say and not.
I still don't see why you shouldn't talk about it though. And I'm still quite skeptic about the feasibility of the concept.
I guess advanced options (EDIT: derivatives) could remove much of the risk, but I don't see how can remove it all. I'll read the v2 of the design, maybe I change my mind.
I hasten to add that none of this requires a hard fork of bitcoin - just some additional layers on top of the bitcoin protocol. Coloring bitcoins adds a very thin new protocol layer, but much more is coming.
Just the example I gave you requires a fork, unless I'm missing something.
My desire would be for you to "sell" the idea that these features greatly justify the changes that can be designed to be minimal.
If a consensus is not reached in the core development, it will be done in an altchain first.
Freicoin already needs a fork for having colors at all, since freicoin satoshis rot. We need colored coinbases.
So we plan to introduce additional changes to allow more features at that same time.
The experiment can be exported to Bitcoin later.
Of course, this is for the future, colored coins without fork can perform tons of useful use cases already.
What we want to solve mostly is interest bearing assets (or negative interest), like demurrage local currencies or loans.
And of course make it all "rippleable", even with pre-signed offers.
I also want private parts of the transaction ala Ryan's two phase commit. But this time not just using the chain for committing the external ripple transaction like I added to his design.
I want public and private parts integrated in the same Ripple transaction.
The last step could be to add an Open Transaction layer for complex contracts meanings and legal liability.
Well, those are my dreams, but I completely believe is all doable.
By the way, input is welcomed. We just thought that we're still changing too many things fast and may be very confusing if you don't know anything about how Freicoin implements demurrage using a refHeight field on transactions.
Not precisely readable and with outdated notes to clean up all around, but if someone wants to take a look (by the way the name is not definitive if the bitcoinX community doesn't want):
https://docs.google.com/document/d/1nnul3oDO5z8sspWBKgTKKSjQ7dWoOqU4Pd8DILLmFN8 
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